Chinese Economics Thread

[gadgetcool5]

Why would you use two different calculations for the US and China?

if Chinese average growth rate is 5.2% (by simply adding both years 2.3+8.1 then dividing by two) then US average growth rate is 1.05% (-3.5+5.6 then divide by two).

Chinese = 5.2% average annual growth rate
US = 1.05% average annual growth rate

China's average growth rate was 4.95x as much (+395% more) over that two year period.

Of course this doesn't actually tell you how much each country grew, just the average rate of growth (and not even taking into account compounding).

As @manqiangrexue states, the more appropriate way to calculate is the difference between starting point and ending point (you actually used this for the US in your comment, but then you calculated only the average annual growth rate for China and used that to compare to the total growth of the US over the two year period):

US is 1.9% larger over the two year period
China is 10.6% larger over the two year period

China grew 5.58x as fast (458% more) over the two year period of 2020 and 2021 as compared to the US.

What's amazing is China is so big now (almost 80% of the US in annual nominal GDP, including HK/MO) that growth differentials like that create an immense difference in economic output added. If China grew 5.58x as much in the next two year period again for example, it would add 4.46x as much in gross value.

So if the US added $400 billion to its GDP over a two year period, China would add $1.784 trillion.

That's correct, I made a mistake in the calculation.

If you take into account compound, US growth was less than 1% average.

US nominal GDP growth this year is going to be huge because of 7% inflation. That's going to add many percentage points all by itself. Another example of why nominal GDP is ridiculous.

 

[tonyget]

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[Broccoli]

Are they planning zero policy after Olympics even thought covid is most likely going be around for a long time? Won't be good for economy in a long run if they do.

 

[mossen]

US nominal GDP growth this year is going to be huge because of 7% inflation. That's going to add many percentage points all by itself. Another example of why nominal GDP is ridiculous.

No, nominal GDP is not silly. PPP is. US dollar is the dominant reserve currency, so America gets these benefits automatically. For all other countries, nominal GDP correctly reflects their international competitveness, PPP does not. If they want to get "free growth" like the US does from just inflation then they should have the dominant reserve currency. Obviously only one country can have it, which is why it doesn't translate to other countries. The French termed it "exorbitant privilege", and they are not wrong.

If this happened to *all* countries then the argument would have some weight. Yet it doesn't, because high nominal growth resulting from high inflation will often mean increased depreciation pressure on your currency. The only way to avoid that is having high competiveness. That is what has happened to China last year. Many other countries (e.g. Turkey, Argentina) had much higher nominal growth yet that was compensated for by strong depreciation pressure. The system works.

 

[Maikeru]

No, nominal GDP is not silly. PPP is. US dollar is the dominant reserve currency, so America gets these benefits automatically. For all other countries, nominal GDP correctly reflects their international competitveness, PPP does not. If they want to get "free growth" like the US does from just inflation then they should have the dominant reserve currency. Obviously only one country can have it, which is why it doesn't translate to other countries. The French termed it "exorbitant privilege", and they are not wrong.

If this happened to *all* countries then the argument would have some weight. Yet it doesn't, because high nominal growth resulting from high inflation will often mean increased depreciation pressure on your currency. The only way to avoid that is having high competiveness. That is what has happened to China last year. Many other countries (e.g. Turkey, Argentina) had much higher nominal growth yet that was compensated for by strong depreciation pressure. The system works.

The CIA disagrees with you:

"note: because China's exchange rate is determined by fiat rather than by market forces, the official exchange rate measure of GDP is not an accurate measure of China's output; GDP at the official exchange rate substantially understates the actual level of China's output vis-a-vis the rest of the world; in China's situation, GDP at purchasing power parity provides the best measure for comparing output across countries"

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[Bellum_Romanum]

Are they planning zero policy after Olympics even thought covid is most likely going be around for a long time? Won't be good for economy in a long run if they do.

And what should they do? Implement a system that is similar to what are being done in failed developed economies of the world? whos growth are anemic and non existent? Shouldn't this question be inversed?

It is like having a student that has consistenly being the top of the class only to be egged on to change the approach by the fellow classmates that are either failing or have failed. Does that make any sense?

 

[Mr T]

I should also add that the traditional strength of the US (rapid population growth) is coming to an end, both due to much lower fertility, elevated deaths and a higher resistance to immigration.

https://imgur.com/p6mxarR

Given these facts, China's population dynamics aren't as bad given America's population dynamics are rapidly declining too. So quality becomes more important than just quantity.

China is still massively behind the US and other countries on things like a decent social welfare system. It still spends only about 7% of GDP on healthcare, which is not reasonable for what is actually made available. Public healthcare in China is really poor unless you're wealthy, much worse than South Korea, Japan or Taiwan. Unless Beijing's gameplan is to keep ignoring the less well off when it comes to social welfare, it's going to have to make big sacrifices to raise standards in China.

Also China's demographic challenges are much different. The US' population growth may not be racing ahead, but that's not the issue. China's problem is that there is going to be a glut of people retiring in the coming years and at the same time much fewer young Chinese are going to replace them. Even if somehow the fertility rate of Chinese women shoots up, it's going to take around 20 years to begin to see the results, time China may not have.

Don't forget, there's still a gender imbalance amongst younger Chinese, so even amongst those who are ready to have children there are going to be millions of men who will be unable to get married.

And all this assumes there won't be lots of young Chinese women who won't want children, or will want at least 2.

 

[Bellum_Romanum]

China is still massively behind the US and other countries on things like a decent social welfare system. It still spends only about 7% of GDP on healthcare, which is way below a reasonable level. Public healthcare in China is really poor unless you're wealthy, much worse than South Korea, Japan or Taiwan. Unless Beijing's gameplan is to keep ignoring the less well off when it comes to social welfare, it's going to have to make big sacrifices to raise standards in China.

Also China's demographic challenges are much different. The US' population growth may not be racing ahead, but that's not the issue. China's problem is that there is going to be a glut of people retiring in the coming years and at the same time much fewer young Chinese are going to replace them. Even if somehow the fertility rate of Chinese women shoots up, it's going to take around 20 years to begin to see the results, time China may not have.

Don't forget, there's still a gender imbalance amongst younger Chinese, so even amongst those who are ready to have children there are going to be millions of men who will be unable to get married.

The U.S. spends the most on health care per capita in the world with the worst health outcome so that should show you that it's not simply about the funding per se but how the funds are being utilized in the most effective and efficient way. China does need to ramp up her Healthcare spending but it'll be done so according to their own conclusions and studies of their population.

But to compare peanuts population countries in terms of population to support your thesis is kinda lame. Taiwan, S.Korea, and Japan combined population do not make a dent to China's massive population therefore her health care challenges is not even in the same league as those 2 developed economies.

You really need to come up with a better argument that is not emotionally based or designed to provoke a response that is not conducive to a good debate. If I need to read anti-China screed I could simply go on reddit, twitter, FB, Youtube, read western publications, think tank "analyses.".

 

[j17wang]

The U.S. spends the most on health care per capita in the world with the worst health outcome. And to compare peanuts population countries in terms of population to support your thesis is kinda lame. Taiwan, S.Korea, and Japan combined population do not make a dent to China's massive population therefore her health care challenges is not even in the same league as those 2 developed economies.

You really need to come up with a better argument that is not emotionally based or designed to provoke a response that is not conducive to a good debate. If I need to read anti-China screed I could simply go on reddit, twitter, FB, Youtube, read western publications, think tank "analyses.".

Lets be real, the US has lower life expectancy and its citizens are less healthy than both Cuba and China, although obviously its going to outperform countries like Iraq and Afghanistan, which isn't saying much. Achieving US levels of healthcare is a standard I hope no government, whether developed or developing, should ever attempt for.

 

[Bellum_Romanum]

And what should they do? Implement a system that is similar to what are being done in failed developed economies of the world? whos growth are anemic and non existent? Shouldn't this question be inversed?

It is like having a student that has consistenly being the top of the class only to be egged on to change the approach by the fellow classmates that are either failing or have failed. Does that make any sense?

Lets be real, the US has lower life expectancy and its citizens are less healthy than both Cuba and China, although obviously its going to outperform countries like Iraq and Afghanistan, which isn't saying much. Achieving US levels of healthcare is a standard I hope no government, whether developed or developing, should ever attempt for.

Tell that to @Mr T